These days, it’s difficult to imagine India without smartphones. Walking down the street in Jaipur, you’ll see teenagers clicking selfies, shopkeepers streaming music videos or playing Candy Crush, aunties chatting on WhatsApp, and auto rickshaw drivers finding customers on Uber (or the Indian equivalent, Ola).
In India alone, there are 430 million smartphone users and the number has continued to increase due to the decreasing costs of devices and data (“India Smartphone Shipments,” 2019). India has the second largest number of smartphone users, following only China (Economic Times, 2019; Singh & Yadav, 2015). Young people have adopted smartphones in droves, which they use to connect to the internet. Over half of all data users are 18-24 years old (Singh, 2013). As a result of the high engagement and interest in smartphones, mobile marketing reached INR 1.1 trillion in 2012 (Bhave et al., 2013).
Globally, mobile data prices are falling but India is outpacing other countries in terms of affordable data. India has the cheapest mobile broadband prices in the world. In India, consumers pay $0.26 for 1 gigabyte (GB) of mobile data, while in the US consumers will pay $12.37 and $6.66 in the UK (BBC, 2019). The global average for 1 GB of data is $8.53 (BBC, 2019). There are many reasons for the fact that India boasts the lowest cost mobile data network, primarily an aggressive campaign by Ambani that launched the 4G phone service Jio, which has driven prices down through an ongoing price war with its competitors (Economic Times, 2019).
Apps and Software
The rise in the popularity of smartphones has created add-on opportunities for vendors, infrastructure providers, manufacturers of electronic products like headphones and speakers. However, the biggest opportunity has been in the development of software and apps (Singh, 2008).
Apps have opened opportunities for mobile banking, e-commerce, education, and data collection that were not previously available. Tech firms are developing apps tailored to the Indian context, localizing features such as language, design, and user interface (Sadafule, 2014). Software designers are rushing to get a foothold in the market, developing apps at a remarkable speed. In an emerging economy like India’s, there are relatively fewer competitors and existing infrastructure is limited, which allows firms to ‘leap-frog’ (Fudenberg et al., 1983) over earlier technologies. Firms like Paytm are introducing mobile pay technologies in places where cash is the main mode for transactions, often skipping over credit card technology altogether. In places with more developed credit card technology like the US, Canada, and Europe, mobile payments are slower to take hold (Pew 2018).
Amazon and Flipkart are popular e-commerce platforms, while most Indian banks over some sort of mobile banking option. Even marketing has moved online, ranging from Zomato that does food delivery, the ranking of restaurants, and offers discount programs such as Zomato Gold, to businesses maintaining social media sites to communicate with customers. Much of the traditional marketing media like television and radio commercials have moved online, where business can set up a social media account for free or design and specialized app for a higher fee.
Defining the Challenge
Urbanization and economic growth are often linked, and rural areas usually lag in terms of economic and social development. While urban growth is often associated with slums and pollution, rural areas are characterized by traditionalism, heavy dependence on agriculture, and lack of access to technology, and poor infrastructure.
Government and private enterprise tend to prioritize urban areas because there are more people concentrated in smaller areas, which increases efficiency and reduces the cost of reaching large customer bases. Better infrastructure and distribution networks make urban areas more appealing for investment and more accessible for government and non-profit interventions.
Despite trends towards urbanization, 70% of India’s 1.34 billion people continue to live in rural areas (UNFPA, 2019). Despite the greater numbers in terms of population, rural residents are less productive than their urban counterparts. Residents of rural areas only constitute 47% of national income (Chand et al., 2019). Rural populations, despite being 30-50% of the market for consumers goods are less likely to be connected to the national economy by reliable and cost-effective infrastructure (BCG, 2019).
Residents of rural areas also need apps and software that fits their needs. Companies like Uber and Amazon are profitable only in urban areas where population density is high. Some of these apps can’t function in areas with low population density or are prohibitively expensive.
By failing to tap into rural areas, the national economy misses the opportunity of reaching a large workforce, many consumers, and decreases overall productivity.
Lack of Skills in the Labor Force
Technological development continues to advance rapidly, devices are increasingly affordable, and there is increased interest in communications technology but there remains a skills gap among the rural population. Using the software itself can be challenging and there are few opportunities for formal education related to communication technology. Additionally, repair and data recovery services are often limited in rural areas and sending products to urban centers can be inconvenient and expensive.
Reaching rural customers to conduct a workshop or training can be more difficult than reaching people in urban communities, due to increased frequency of remoteness, low population density, and poor infrastructure in rural areas. Therefore, many organizations offering skill development programs are more present in urban areas for pragmatic reasons.
The lack of skills in rural populations often create a “digital gap” where rural dwellers’ lack of skills prevent them from accessing the full benefits of the digital revolution (Salgame, 2019). This is a missed opportunity for millions of people who could leverage technology to raise their incomes, productivity, and create more opportunities for future generations.
Looking to the Future
Technology has long been heralded as a solution for transmitting information, especially related to small business in rural areas. Mobile banking (EY, 2019), microfinance groups (Parikh et al., 2006), and e-commerce platforms are noticing the potential of communication technology to expand into rural areas and reach more customers. In India, there is an opportunity for organizations, notably for-profit companies, but also social impact organizations and government agencies, because the population is large. Digital technology seems like a good avenue for reaching these people because the population is relatively young, which is the population segment that is more willing to engage with technological solutions (Bhatnagar & Schware, 2000; Malkani, 2019).
However, technology is not a silver bullet for rural development. It is a tool that can contribute to rural development if leveraged strategically. While digital technology can facilitate communication and transmit data rapidly, the right systems need to be in place for this flow of information to take place (Guérin et al., 2012).
Understanding the Challenges
If technology has the power to overcome the challenges of remote rural communities, why hasn’t it been leveraged yet? There are several reasons for this.
The High Cost of Initial Investment
Rural areas are characterized by their remoteness and the difficulty of accessing households there. Developing infrastructure is inherently more expensive than urban areas and there is a lower payoff because the population is relatively less dense than urban areas (Ruttan, 1975). The level of technical skills is generally lower in rural areas and these factors contribute to a higher initial cost of investment. Many firms are unable or unwilling to invest the required amount to reach these areas, especially because the benefit is not guaranteed to go only to the organization who develops the infrastructure. For example, if an organization invests in workshops for developing the skills of rural employees, these same skills can be applied to competing firms. If the organization builds apps and distribution models, these formats can be copied by competing firms who don’t have to bear the initial cost of researching and developing an effective model.
Low Understanding of Rural Areas
Another barrier for organizations who wish to enter rural areas is the lack of available information and data. This is caused by the high cost of gathering information from geographically dispersed households that may, in contexts like rural India, speak different languages and have different cultural practices (Berdegue & Escobar, 2002). Understanding the needs and aspirations of rural households requires research, which is made more expensive and less efficient by the reality of widely dispersed households and greater diversity between communities (Ruben & Pender, 2004).
Disinterest in rural areas
While some organizations avoid rural areas for pragmatic reasons, others have not pursued rural markets due to a lack of interest (Ison et al., 2000). Culturally, rural areas are often viewed as less desirable than urbanized areas, which leads many organizations to dismiss rural markets as a viable option for investment.
Designing a solution
Organizations, including Frontier Markets, a social enterprise operating in Rajasthan, have been trying to crack the problem of reaching rural communities. While there are many opportunities in rural areas, there are also barriers that require creative solutions to overcome.
Frontier Markets’ core strategy is understanding rural communities at a deep level as efficiently as possible. From this, organizations can tailor solutions specifically to the rural household. Technology plays a crucial role in this because sending staff to remote areas can be expensive and time-consuming. Additionally, staff who come from outside the community to do research may not be able to access the true opinions and genuine insight from rural households because they haven’t established a relationship of trust with the community.
Frontier Markets’ solution is to employ local woman, train them on the use of smartphones, and build a data-collection app that is tailored to their needs. Women are ideal candidates for this role because they generally have robust social networks and they understand the needs in the household. On average, female interlocutors record more data points and conduct longer interviews than their male counterparts.
However, for female interlocutors to record and transmit their data, they need to understand how to use a smartphone. There is a significant literacy gap between men and women in rural India, which suggests a gap in general education. Training women on digital technology is essential, regardless of education level, but solutions like voice recordings and icon-based interfaces can help overcome this challenge.
The software required to connect female interlocutors must be tailored to them and designed in a way that is easy-to-use and functional, even in areas with inconsistent or slow mobile data networks. Frontier Markets has begun development of such an app, which is being custom-built from the ground up.
The combination of software, training, and access to opportunities to generate income through the collection of data is Frontier Markets’ advantage over other companies. However, the cost of investment in these solutions can be very high. This is where Frontier Markets leverages funding from philanthropists who understand the necessity of including rural areas in the national economy and see the value of using women to help achieve that goal.
Increasingly, rural areas are an opportunity to reach more people, generate more income, and create more social impact. Technology is not a “silver bullet” for addressing development challenges, but it is a tool that can help organizations achieve their goals and engage rural residents, but it needs to leverage technology strategically. By understanding the challenges and opportunities of rural areas, organizations can better access these communities and increase connectivity and deliver impact.
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